Posted by Frank on August 07, 2003 at 19:57:59:
Hi Dyansty,
I would suggest that what ever you are doing as self employed be in a corporation (LLC) status regardless of whether you are looking for a mortgage or not. Protect yourself.
A lot of lenders have loan programs for NIV (Non-Income Verified). Usually their LTVs (Loan to Value) are usually higher but they can go by your tax returns or bank statements to qualify you for a loan.
Just be careful. I had a client who was self employed who’s tax returns showed she wasn’t making any money, but yet her bank statements showed she was making a lot of money. In otherwords, she was taking every deduction under the sun to show she didn’t make any money, but yet, the tax returns made it hard to qualify her for a mortgage. Good thing for her bank statements (3 months) showed regular large deposits.
She had the 20% to put down on the property so it worked out, but had she not had the 20%, it would have been awfully hard to finance the purchase.
For you mortgage brokers out there, I made 7% of the transaction. 3% up front with 4% through the back door.
All in all, we all got what we wanted. Two years later, she came back to refinance. Of course I only charged 1% this time around.
Best of luck with it.
Frank